"Homebuilders start fessing up"
From Prudentbear.com.
Go this link to see comments from DR Horton and the other homebuilders.
From D.R. Horton: “…right now I truly believe that there are a lot of fence-sitters out there. They don't have to buy because of the fact that the appreciation is not like it has been over the last two or three years, so if they don't buy today, they're not going to miss an uptick in the house price, so there’s not really much motivation for them to buy unless they really need a home. “And also we have significantly higher cancellation rates, which all builders are experiencing. So when we look at our fourth quarter, what we're trying to do is give you an absolute bottom line number that we can hit or exceed. And I guess I don't want to get in to any other builders on this conference call, but I get confused when I look at some of the numbers that I'm hearing other builders produce and report, and it reflects margins staying the same in the next two quarters. And that's just not out there, and if it's out there, we'll be glad to be the beneficiary of that, but we're not going to assume that.
On the Phoenix market – “I can tell you that market is going to get softer going forward, so we're looking at this future market with very, very clear vision – with no rose colored glasses on – and we don't want to paint a picture of anything else other than what we're actually seeing in the market place out there. And if we're going to get punished and we’re going to get pummeled because of the fact that we're being more accurate than some people think we need to be, so be it.
On the California market – “So I think really, clearly, what's affecting the demand in a number of our markets is simply we've depleted the pool of affordable buyers by escalating real estate prices in a number of our market, and then that has been somewhat aggravated by the fact that interest rates have worked their way up, although I will tell you that interest rates don't have a hill of beans to do with our business in a large way. If you – listening to somebody this morning – if you look at the 30 year mortgage rate, it's still one of the lowest it's been in the history of the U.S., so it's not the fact that a less than 7% 30 year mortgage rate is not available out there. I think it's a function of the fact that median homes price – median price of homes – especially, look at Las Vegas. Two years ago, the median price of homes went up 50%. The next year it went up 25%. What happened? Pool of buyers dissipated.
Go this link to see comments from DR Horton and the other homebuilders.
From D.R. Horton: “…right now I truly believe that there are a lot of fence-sitters out there. They don't have to buy because of the fact that the appreciation is not like it has been over the last two or three years, so if they don't buy today, they're not going to miss an uptick in the house price, so there’s not really much motivation for them to buy unless they really need a home. “And also we have significantly higher cancellation rates, which all builders are experiencing. So when we look at our fourth quarter, what we're trying to do is give you an absolute bottom line number that we can hit or exceed. And I guess I don't want to get in to any other builders on this conference call, but I get confused when I look at some of the numbers that I'm hearing other builders produce and report, and it reflects margins staying the same in the next two quarters. And that's just not out there, and if it's out there, we'll be glad to be the beneficiary of that, but we're not going to assume that.
On the Phoenix market – “I can tell you that market is going to get softer going forward, so we're looking at this future market with very, very clear vision – with no rose colored glasses on – and we don't want to paint a picture of anything else other than what we're actually seeing in the market place out there. And if we're going to get punished and we’re going to get pummeled because of the fact that we're being more accurate than some people think we need to be, so be it.
On the California market – “So I think really, clearly, what's affecting the demand in a number of our markets is simply we've depleted the pool of affordable buyers by escalating real estate prices in a number of our market, and then that has been somewhat aggravated by the fact that interest rates have worked their way up, although I will tell you that interest rates don't have a hill of beans to do with our business in a large way. If you – listening to somebody this morning – if you look at the 30 year mortgage rate, it's still one of the lowest it's been in the history of the U.S., so it's not the fact that a less than 7% 30 year mortgage rate is not available out there. I think it's a function of the fact that median homes price – median price of homes – especially, look at Las Vegas. Two years ago, the median price of homes went up 50%. The next year it went up 25%. What happened? Pool of buyers dissipated.
posted by Little_Silvered at 6:05 PM
5 Comments:
At least they are a more honest source than NAR.
New home sales fall more than expected in June Thu Jul 27, 10:02 AM ET
Sales of new U.S. homes fell more than expected in June to a seasonally adjusted annual 1.131 million rate and the median home price fell for the second month in a row the government reported on Thursday, as the U.S. housing market showed more signs of cooling.
The 3 percent drop in new home sales was the first decline since February, the Commerce Department said. Compared with a year earlier, new home sales were down 11.1 percent.
Analysts polled by Reuters were expecting new home sales to cool to a 1.160 million annual rate.
Median selling prices dipped to $231,300, but was still above the $226,100 median price in June 2005.
In a further sign of a cooling housing market, the number of homes available at the current sales rate rose to a 6.1 months' supply, the highest level since March. There were 566,000 new homes for sale at the end of the month, a record high.
Regionally, home sales tumbled 11.3 percent in the volatile Northeastern housing market to 55,000, the slowest pace since July 2004. New home sales slipped 6 percent in the South and 7.9 percent in the Midwest, but they rose 8.2 percent in the West.
Homebuilder Pain Spreads !!!
Check Homebuilders stock prices trend !!!
The Economy | As air comes out of home market
By Andrew Cassel
Inquirer Columnist
A blog I look at occasionally featured a heart-wrenching series of missives last week, from a real estate broker in a fast-growing suburb of Atlanta. At least it used to be fast-growing.
In January, the broker, a 12-year veteran of the business, wrote:
Business is booming. I know of no one complaining of slow business, or worried about losing their job. Everyone is too busy making money to have time to worry... We are seeing lots of money out there... A very bright year lies ahead.
But 10 days ago, the same broker posted a follow-up:
It's been a "character-building year"... We ended the first quarter with nine deals pending or closed, which is a very solid start. Then we hit a brick wall with only three deals in the second quarter. That would make it our worst second quarter ever in our 12 years. Then it got worse... .
As everyone from Alan Greenspan to your brother-in-law has been saying for years now, all real estate markets are local. But when prices go stratospheric in scores of local real estate markets across the country - as happened over the last five years - the odds get kind of long that any local real estate market can defy gravity on its own.
In other words, if you think it's different here - no matter where here happens to be - think again.
Underlying economic and financial conditions affect everybody, from first-time home buyers in modest suburbs to empty nesters buying luxury condominiums.
At the most basic level, the price of real estate cannot keep rising faster than the incomes of the people shopping for it. Buyers might be induced to pay up for a while, bubbles can develop here or there, but over the long run, housing costs and incomes move together. Unless incomes start growing a lot faster than they have recently, housing prices will inevitably stagnate or fall.
Then there's the price of money, a.k.a. interest rates. It shouldn't surprise as many people as it does that home prices go up when rates go down, and vice versa. A house priced at $500,000 has a lot more potential buyers with mortgage rates at 6 percent than it does at 8 percent.
But the biggest worry, at least for the immediate future, is the feedback loop a falling market can create.
As the air comes out of real estate, it affects more than just the people trying to sell their houses. Brokers such as the fellow in Georgia have trouble making ends meet. Mortgage bankers see their business dry up. Construction work for new houses disappears, and sales of secondary home-improvement items such as curtains and plumbing get soft as well.
All in all, the fallout can be broader and affect more people than, say, a slowdown in technology or manufacturing, says Malvern economist Michael Donnelly. That's because housing is labor-intensive compared with other parts of the economy.
"When housing starts to go into the tank, you get a lot more layoffs than in other sectors," Donnelly said.
There was dramatic evidence Friday of how housing could affect the wider economy, when the government released a surprisingly low estimate of gross domestic product growth in the second quarter of 2006.
The economy grew at an annual rate of 2.5 percent compared with 5.6 percent in the year's first three months. The slowdown was sharper than most economists had forecast, and it increased talk that the United States might be headed for recession this year or next.
Donnelly explains why: Since 1960, housing has accounted for an average of about 4.5 percent of the total U.S. economy. The proportion fluctuates; during the recessions of 1982 and 1990, it fell below 3.5 percent.
But since 2000, housing's share of the economy has soared, reaching a high of 6.3 percent last year. This year it fell back to just over 6 percent.
If that number were to keep dropping to its long-term average of 4.5 percent, Donnelly calculates it would mean the loss of about 1.5 million jobs.
Worse, he notes that the last two times housing hit peak levels as a share of the economy, deep recessions followed.
That's not a prediction. Maybe this time it'll be different.
But maybe not.
http://www.philly.com/mld/inquirer/business/15153483.htm
If this post is saying there was only one closing in July in Rumson, there must be some mistake as my neighbors just closed in Rumson in July as did two other people I know. I can't know the only people in the entire town can I?
Im sure the bubble is deflating but who ever said the market would be hot forever? Predicting its collapse was like predicting the earth would rotate around the sun. I wouldnt go patting anyone on the back for it.
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